New regulations governing the sale of life assurance, including the disclosure of the commission paid to brokers, officially came into effect yesterday.
The regulations provide for the disclosure of detailed information at the point of sale. In the case of policies acquiring a surrender or maturity value, they require insurers to provide annual up-to-date statements to policyholders indicating the current premium payable, the current surrender or maturity value of the policy and other relevant information.
The new rules also address the issue of entertainment of brokers by insurers, which has been the subject of much attention of late after Irish Life confirmed it was taking 43 insurance brokers and their partners to South Africa on an incentive trip which will cost the company almost £500,000 (€634,869).
The company took a party of brokers to Dubai last year while other recent broker trips involved New Ireland taking a party and their spouses to Paris and Hibernian taking a party of brokers to Brazil.
The cost of such entertainment will have to be disclosed as part of the intermediary's remuneration. Where the entertainment is offered on the basis of the intermediary achieving a given level of business and where the sale of a policy contributes to the achievement of that level of business, the regulations require that this fact and a description of the arrangement should be disclosed to the client.
"As a result of these new disclosure requirements, consumers will now be able to understand much better the features of the insurance policy that they are buying and to know what the likely return on the new policy will be," the Minister of State for Science, Technology and Commerce, Mr Noel Treacy, said.
He urged consumers to take time to read the information being provided so they understood the type of cover they were purchasing and its cost.
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